B.C. Hydro awaits Site C dam decision

As early as this week, B.C. Hydro will learn whether it has cleared its biggest hurdle for its proposed Site C dam. The Crown corporation has already spent in excess of $300-million preparing the project as it waits for the conclusion of an environmental review.

The 26-day hearing by the Joint Review Panel is the most rigorous review B.C. Hydro has ever faced. But the panel spent only a day and a half looking at the questions that have sunk the dam proposal twice in the past: Does British Columbia need more electricity, and if so, is Site C the best choice to generate that power.

Those core issues would have been considered by the utility's regulator, the B.C. Utilities Commission, but the province has been so eager to move forward with the project that it exempted it from that level of scrutiny.

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If the panel concludes that Site C is environmentally sound, there is little reason to expect either the federal or provincial governments to say no. The finances are not a federal concern – this is B.C. money on the table. And Premier Christy Clark pledged her support for the project during the past provincial election campaign.

There is little doubt that the massive earthfill dam on the Peace River in B.C.'s northeast corner will destroy farmland and damage wildlife habitat. Or, to use the charming Hydro phrase, the "conversion of terrestrial habitat to a reservoir habitat." If the panel accepts the footprint of Site C, in the shadow of two earlier dams that have already irrevocably damaged the Peace River, then there isn't much in the way, it seems.

Yet B.C.'s Energy Minister won't say yet whether he is willing to recommend the project to his cabinet colleagues.

Bill Bennett accepts that the need for more electricity is real. B.C. Hydro forecasts that demand for electricity from its residential, commercial and industrial customers is set to increase by 40 per cent over the next two decades. That does not include any energy-intensive liquefied natural gas plants. The corporation says it can cut the new demand in half through conservation efforts, but it still needs additional generation.

Where Mr. Bennett's confidence wavers is on the question of where that new power should come from.

"It would appear we are going to need a project or projects the size of Site C to meet the demand that will be there," he said in an interview. "I have a very keen interest and a commitment to the people of the province that I'm going to make sure that if I recommend to cabinet that the Site C project go forward, that it is the best possible choice for us here in British Columbia to acquire that 1,100 megawatts of capacity."

Even as his Premier maintains the project is crucial, Mr. Bennett is cautious about accepting Hydro's case. He knows that major hydro projects across the country have stumbled into cost overruns, including B.C. Hydro's Northwest Transmission line. Manitoba's new Wuskwatim dam almost doubled in cost and in Newfoundland, the costs of the Muskrat Falls hydro project are escalating while the in-service date may be delayed.

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Despite the trend, B.C. Hydro maintains its dam will be built for $7.9-billion, the figure it produced in 2010 based on market prices for labour, equipment and materials, with a 10-per-cent allowance for inflation. It is an estimate, the Crown notes, "used as the project budget until replaced by more detailed estimates."

Mark Jaccard is a former chair of the B.C. Utilities Commission, now a professor at the School of Resource and Environmental Management at Simon Fraser University. Like Mr. Bennett, he doesn't doubt that the demand for electricity is going up in B.C. But B.C. Hydro is claiming that its project is the most cost-efficient way to produce electricity, and that's just not clear, Prof. Jaccard said. "I'm not saying it is going to go overbudget but it has been a good policy not to circumvent the regulatory review," he said.

Mr. Bennett has stoutly defended the decision to circumvent the utilities commission. Now, he is opening the door to some kind of external check of Hydro's assumptions. "There may well be an opportunity to do another level of screening on the costs; I wouldn't rule that out," he said. Just don't expect a detailed, public financial review. "If you think all the due diligence has been done, government shouldn't be afraid to say yes … just because there may be some uncertainty."